Release Date: January 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Empresas CMPC SA (XSGO:CMPC, Financial) reported consolidated sales of $1.9 billion for the fourth quarter of 2024, demonstrating a strong revenue base.
- The Pulp business showed a significant year-over-year EBITDA increase of 215%, driven by higher volumes and lower cash costs.
- The company has been recognized as the World's Most Sustainable Company by the Dow Jones Sustainability Index for the second consecutive year, highlighting its commitment to sustainability.
- The Biopackaging segment saw a 4% increase in sales volumes quarter-over-quarter, indicating growth in this area despite challenging market conditions.
- Empresas CMPC SA (XSGO:CMPC) has a strong balance sheet with a net debt-to-EBITDA ratio of 3.15x, showing improvement from previous quarters.
Negative Points
- Net income for the fourth quarter was $10 million, a significant decrease from $147 million in the previous quarter, primarily due to lower EBITDA.
- The Softys business experienced a 20% year-over-year revenue decline, impacted by currency depreciation and challenging consumption trends in key markets.
- Biopackaging EBITDA decreased by 27% quarter-over-quarter due to higher production costs and operational expenses.
- Operating costs increased by 2% quarter-over-quarter, representing 65% of total revenues, which is higher than the previous quarter.
- The company faced a net cash outflow of $109 million during the fourth quarter, attributed to lower EBITDA and higher capital expenditures.
Q & A Highlights
Q: How do you see your pulp costs evolving in the coming quarters, and do pulp prices need to be higher for better cash flow generation?
A: Fernando Hasenberg Larios, CFO, explained that the company is working on improving its cost structure as part of its competitiveness strategy. Specific events, such as a 45-day stoppage at the GuaÃba I mill, affected costs. However, improvements in chemical and raw material consumption are expected to yield better results in upcoming quarters.
Q: Can you provide an update on the Natureza Project and its submission to the Board?
A: Francisco Ruiz-Tagle Edwards, CEO, stated that the Natureza Project is progressing as planned, with environmental permits being pursued. The project is not expected to be submitted to the Board in 2025 but likely in mid-2026.
Q: What is your view on the trajectory of pulp prices and market dynamics?
A: Fernando Hasenberg Larios noted that pulp prices increased in January, with further potential increases in February. The market remains uncertain, with weak demand in some areas and tight margins for papermakers. However, higher prices are expected as the market nears the floor, especially for hardwood.
Q: How are you planning to finance the Natureza Project, and what are your margin targets for Softys?
A: Fernando Hasenberg Larios mentioned that it is too early to finalize the financing strategy for the Natureza Project, but CMPC is committed to maintaining a strong balance sheet. Francisco Ruiz-Tagle Edwards added that Softys aims for an EBITDA margin of 15% and above, despite competitive pressures and currency depreciation in key markets.
Q: Are there plans to increase capacity in the softwood market, and how are you addressing costs in the packaging segment?
A: Francisco Ruiz-Tagle Edwards stated that there are no plans to increase softwood capacity, with a focus on maintaining current levels. In packaging, the company is applying its competitiveness strategy to improve margins, despite challenges in the construction market and consumption declines in some regions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
